GARDEN ROUTE NEWS - High property prices and rental rates is a topic of much discussion among Georgians. Rental properties are in such demand that it is difficult to find a place to rent, and many people complain that it is becoming unaffordable and their salaries are not keeping up.
Last year, when George Municipality updated the valuation roll, George Herald received numerous queries from homeowners who complained about their properties' valuations increasing by up to more than 80%.
We reported that property prices in the George area on average increased by between 40% and 50% since the previous municipal property valuations in 2018.
At the time, Bert White of Meridian Realty in the Garden Route explained that the normal increase should be according to inflation, say about 8% per year.
Therefore the increases on the valuation roll should not have been above 35%. However, the municipality is also supposed to compare the values with the market value, which has skyrocketed due to the influx of new residents with a resultant shortage in properties.
Tim Kirby's take on the market
George Herald recently chatted to Tim Kirby, past chairperson of the South Cape branch of the Institute of Estate Agents of South Africa (IEASA), about the property trends in our region and wanted to know if we are not in a property bubble that is going to burst. He answered the following questions:
Q: Do property prices follow the same trend in the entire Southern Cape (George, Knysna, Plett, Mossel Bay, Stilbaai and Riversdale)?
A: From my understanding, with the exclusion of Riversdale, of which I have no knowledge, the entire Southern Cape from Stilbaai through to Plett, have all experienced exceptional demand and growth in property prices over the past 18 months.
However, we have more recently, over the past quarter, experienced caution from buyers from up north, and in many cases, resistance to asking prices.
The majority of our property investors are from the northern parts of our country and they certainly express surprise at what they have to invest in the George area, compared with what they realise for their larger properties in Gauteng and the Free State.
This property is in the market for R2 375 000.
Q: Is Oudtshoorn still more affordable?
A: Yes.
Q: What is the price range for an average three-bedroom family home in our area (1) to buy and (2) to rent?
A: To buy: between R2 500 000 and R3 000 000, depending on the location. To rent: Between R14 000 and R17 000.
Q: What is the price range for one-bedroom and two-bedroom apartments (1) to buy and (2) to rent?
A: To buy: between R1 400 000 and R1 800 000. To rent: from R7 000 to R10 000/R11 000 per month, depending on size, finish and location.
Tim Kirby, past chairperson of the South Cape branch of the Institute of Estate Agents of South Africa (IEASA).
Property bubble not expected to burst
Q: How do these prices compare with other parts of the country, for example with Gauteng, from where many newcomers are relocating? Are the prices in George and surrounding areas 'realistic' - are they really worth so much and aren't we in a bubble that is going to burst?
A: Apartments in the northern parts of our country offer better value for money.
My opinion is that the George and surrounding area prices are 'realistic' in that we are very much in a supply and demand situation, driven by those who choose to and those who can afford to enjoy the excellent and well-maintained infrastructure, natural beauty and convenient and secure lifestyle that our area provides.
Living in this area has always been living in somewhat of a 'bubble', which I don't foresee will burst.
'Increases to be more gradual'
Q: What is the outlook for property in the Southern Cape/Garden Route? Do you foresee the steep growth in newcomers and prices to continue in the medium to long term?
A: I do see the demand for those moving into the area continuing in the medium to long term, although I feel that prices will increase more gradually than what we witnessed 18 months ago. Top-end homes fetch up to R80m.
Q: What prices are fetched in the Southern Cape in the top end of the market?
A: The very top of the market along the Southern Cape coastal stretch can achieve selling prices in the region of R60m to R80m, particularly in Plett; George area more in the region of R40m for top-end single residential.
Q: In which price range is the biggest demand for both rental and acquired property, and in which range is the biggest shortage?
A: Acquiring: R2m to R3m for single residential homes. Rental: R12 000 to R15 000p/m for single residential homes.
Q: In many neighbourhoods older properties have been or are being spruced up, which is good for property values in these areas. Is it cheaper to buy an older property in a good neighbourhood and renovate rather than buy a new home in a security development, or is this happening because people are desperate to obtain property here?
A: Yes, it's great to see the traditional, older residential areas of George being upgraded - this is a good question - many people prefer the spaces of home and garden and convenience of location that the older homes offer.
Not everyone chooses to live in an estate [in light of] the rules, regulations and limitations estates prescribe, particularly younger families.
Q: Do most home buyers come from outside of George/the Southern Cape?
A: Yes, most definitely from north of the Southern Cape.
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